Stocks Bounce Off Lows to Finish to the Upside…..
U.S. equities finished higher in a volatile session, as investors remained resilient in the face of lingering concerns surrounding heightened political tensions, the recent jump in Treasury yields, and the surging COVID-19 cases and variants. The upbeat sentiment centered on an expected recovery in the second half of 2021, as multiple vaccines are being administered and amid a backdrop of massive monetary and fiscal support. In economic news, small business optimism fell more than expected, while job openings dipped by a smaller amount than anticipated. On the equity front, Dow member Walmart announced the creation of a new fintech startup with Ribbit Capital, Becton, Dickinson and Company positively preannounced revenues and Boston Scientific issued a negative revenue preannouncement. Treasuries were little changed and the U.S. dollar declined after a recent bounce off multi-year lows, while crude oil prices added to a recent rally and gold was higher. Europe finished mostly lower, while markets in Asia were mixed.
The Dow Jones Industrial Average rose 60 points (0.2%) to 31,069, the S&P 500 Index was up 2 points at 3,801, and the Nasdaq Composite increased 36 points (0.3%) to 13,072. In heavy volume, 1.1 billion shares were traded on the NYSE and 7.1 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.96 to $53.21 per barrel. Elsewhere, the Bloomberg gold spot price was $11.14 higher at $1,855.03 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.4% to 90.06.
Per FactSet, the estimated earnings decline for the S&P 500 Index in Q4 is expected at -8.8% y/y, which would mark the third-largest drop since Q3 2009. Seven sectors are projected to report a y/y decline in earnings, led by the Energy, Industrials, and Consumer Discretionary sectors, while four are expected to show y/y earnings growth, led by the Materials and Health Care sectors.
Small business optimism falls, job openings dip by smaller amount than expected…..
The National Federation of Independent Business (NFIB) Small Business Optimism Index for December fell to 95.9 from November’s 101.4 level, compared to the Bloomberg estimate of a decrease to 100.2. The index fell below its average value since 1973 of 98 as nine of the ten index components declined and only one improved. The uncertainty index, the percent of the owners thinking it’s a good time to expand, sales expectations, and earnings trends all decreased, while current inventories increased. The report added that, “This month’s drop in small business optimism is historically very large and most of the decline was due to the outlook of sales and business conditions in 2021, and small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.” On the jobs picture, plans to increase employment also declined.
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, showed 6.53 million jobs were available to be filled in November, versus forecasts calling for 6.45 million jobs, and down from October’s downwardly-revised 6.63 million figure. The report showed the hiring rate remained at October’s 4.2% rate, but separations rose to 3.8% from the prior month’s 3.6% pace.
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